How the Federal Reserve Uses Art as an Asset

The Economist does a nice job profiling the Federal Reserve Bank’s art program which exists to enrich the working lives of those at the Fed, support the arts and generally promote culture among the money-centric.

The Fine Arts Program does not use government money to buy art. Instead artworks are amassed through donations, or bought with monies donated for the explicit purpose of buying art. This sets it apart from other governmental art programs (such as the state department’s Art in Embassies program) which rely on appropriated or budgeted funds. Aside from this parsimonious quirk, Stephen Bennett Phillips, the program’s director, suggests it is best to “think of it as a museum.” Indeed, its advisory panel includes the sort of society doyennes, art dealers, lawyers and industrialists that any major museum would be proud of. But who would donate to the Fed when they could donate to, say, the National Gallery of Art down the road? “If you donate to a large museum, probably 99% of the time your work is going to be in storage,” says Mr Phillips. “What we can provide is the opportunity for the works to be seen and appreciated on a daily basis.” It is an opportunity that seems to be increasingly popular.

Since 2007, the year of Mr Phillips’ arrival, the collection has more than doubled in size. This reflects the high-wheeling connections the director brought with him from his former job as a curator at the nearby Phillips Collection, a well-funded private museum. But it also seems, in part, to be a side-effect of the burgeoning art market of the last decade. Since capital-gains tax on the sale of art and collectibles is taxed at a higher rate than that of stocks and bonds, the benefits of donating art and claiming a tax deduction, have never been more attractive. (The Fed does not accept gifts from individuals or organisations that it regulates). […]

Since Mr Phillips’ arrival the Fed’s collection of photography has grown and now includes works by Weegee, Alfred Stieglitz, Robert Frank and William Eggleston.

The main venue for temporary exhibitions is grander. In the two-storey marble atrium, with dual staircases and Art Moderne details, hangs two enormous gems from the collection: Helen Frankenthaler’s colourful abstract, “Three Color Space” (1966), which was donated by Nelson Rockefeller and may be the most valuable artwork in the collection; and Robert Kushner’s “American Tapestry” (2008, pictured above right), which is a diptych of native grass and flowers embellished with gold leaf and mica that emits a restrained but knowing opulence.